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Equities on both sides of the Atlantic slid overnight as concern about the global economy, spurred by reports including a surprise drop in Germany's factory orders, returned to the forefront of investors' minds.

Also, shares of Allergan tanked, last 15.3 percent lower in afternoon trading in New York, amid concern about that Pfizer's US$160 billion planned takeover of the Dublin-based company might be thwarted by new US tax measures.

Pfizer is leaning toward abandoning its agreement to buy Allergan because of the new measures aimed at curbing tax-evading corporate deals, Reuters reported, citing a source familiar with the situation.

Meanwhile, researchers at the Institute of International Finance, a Washington-based association that represents close to 500 financial institutions from 70 countries, say the chances of a US downturn within two years are at around 30 to 35 percent due to the earnings slump, up from 20 to 25 percent, Bloomberg reported.

In their April "Capital Markets Monitor," IIF executive managing director Hung Tran and his team blamed the global decline in earnings on poor productivity growth, weak demand and a general lack of pricing power.

"In the past, if you had poor performance at home, you could recoup and compensate for that with overseas investment," Tran told Bloomberg. "But if you suffer declines in profits domestically and internationally, you tend to retrench."

US Treasuries advanced, pushing yields three basis points lower to 1.73 percent. "We're not an island in the world, and these global concerns have affected us," Aaron Kohli, a fixed-income strategist at BMO Capital Markets in New York, told Bloomberg. "The big question now is the persistence of that turmoil."